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tv   Trending Business  Bloomberg  April 21, 2016 9:00pm-10:01pm EDT

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♪ it is friday the 22nd of april. i am rishaad salamat. you are watching "trending business". ♪ let's take a look at what we are watching for you. mitsubishi motors under the hammer again, losing 40% of its value in two days. many-car lose nissans business, too. yen hitting of the japanese equities along with disappointing corporate results. the music world morning the loss
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of another star, prince. paul mccartney called him a creative giant. do let us know what you think of our top stories. china and hong kong markets getting underway in about half an hour. a gauge of what is going on with your money today. >> money going down a little today. not a great end to the trading week. times down,rait malaysia with a similar loss, and taiwan. faring better than the open, down a third of 1%. the yen unchanged at the moment, although stronger in the early session.
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and mitsubishi motors are the two worst performers on the .ikkei 225 asx 20 hit hard by the downturn. the new zealand market also weaker to round out the trading week, down a third of 1%. trim back thell weekly gain we had seen on the regional index, currently down a third of 1% before china and hong kong come online. a few stocks we want to watch in up region today, iron ore 8.8%, the second-biggest gain ever. atlas iron is very strong on that. it wasalysts were saying doing quite well, so a little overbought. bhp billiton down by 2%.
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looking like a bit of a downbeat day across the region today. you a lot for that. mitsubishi motors losing 40% of its market value in two days, shares plunging for a third day because of the fuel economy cheating scandal. let's find out what's going on. mitsubishi shares are nosediving today after finally starting to trade. not tradedas yesterday because nobody wanted to buy, while everyone else wanted to sell. instead, the tokyo stock exchange had to set a closing price, a 20% drop from wednesday, when it already lost
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15%. has now erased more than 40% of its value since the scandal broke, and is worth $4.5 billion. mitsubishi admitted to cheating japan by0 minicars in understating how much air and tire resistance they encounter on the road, but now we are hearing from a local newspaper that this issue may include more mitsubishi models, that is on top of the models we already know about. japan's transport ministry said it is continuing its investigation of mitsubishi and will inspect its plants today as well. authorities have said that mitsubishi should consider buying back affected cars. the government is also reportedly considering changing
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its field economy tests for new cars. mitsubishi has said that it's testing methods for passenger cars has not complied with japanese standard since 2002. nissan, who got about three quarters of those tainted cars, is now said to be considering producing its own minicars, having a big impact on mitsubishi's bottom line. says mitsubishi motors won't be releasing its 2016 full-year forecast. right, we will have a look at that story for you in the show. we want your opinion. tweet us at @rishaadtv, and include #trendingbusiness. japan post shipping $2.5 trillion of its portfolio to riskier assets to boost profitability. the bank of japan's negative .ate policy is shrinking
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of where we are with japan post and what it is doing here. >> good morning. to the new ceo of the japan post holding company, formerly the ceo of the banking unit, and he told us that with -0.1%,e interest rates, the impact on the bank is manageable. if it goes further, it might start to hurt more. he says the real key was in adjusting their investment strategy. over ¥200as just trillion and assets, and 40% is in japanese government bonds, which are increasingly affected by negative yields. 50% of the market returns negative yields now.
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they are looking at shifting and nottheir money putting it back into japanese bonds and investing in things like private equity. he also spoke about real estate investment trusts and infrastructure funds as well. rishaad: the government still has that stake in japan post. any idea of the noises out of tokyo and what they will do? are they likely to sell it down more? initially listed the company in november last year, they sold 11% of the company, and in the holding company went on to sell 11% of each of its units. endin the game is fit -- game is 50% of the company. the lockout period is set to
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expire next month. --was very cory on whether the exact schedule for that, citing market concerns. coy on whether -- the exact schedule for that, citing market concerns. rishaad: japan posts, where does it put its pension money? let's look at some other stories we are watching. the one part of sony that was doing well just is not anymore. david: we are in the middle of the turnaround plan. shares are doing this at the moment, opening 3% lower. we have mostly disappointing guidance from the company, so shares are down 1.8% over two days. the numbers look like this. changes fromg at the last set of forecasts three
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months ago, better sales, profits down. the final report comes out at the end of this month. changes,ns behind the have a look at the three. the second one is core business. first and third, something outside the control of sony. also, a sharp drop in interest rates leading to an adverse impact. analysts are still bullish on the stock, not necessarily the same view on the business itself. anr function on the bloomberg. , a 25% pop from where we are at the moment. let's have a look at google and alphabet.
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out with earnings overnight, hitting a speed bump. the company missed first-quarter sales, first-quarter profit, blaming weak growth in ad sales and thinner profit margins. the cfo was talking with analysts, and she is saying that there are certain costs associated with revenue, variable costs, and they have been going up as a result of broad changes in the business and environment. the result, she says, is more revenue, but at a lower margin. keep in mind that we are seeing some pressure in the after hours. the company is still the world's most second viable, five to $20 billion.- $520 let's have a look at the macro space. this, roughly and
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change from yesterday. there is the speed bump right there. that happened during the mariocement, mr. draghi indicating the need to remain low or lower. he also said they did not discuss any additional measures. he says policies have been working and defended negative rates, saying there has been no sign that it is hurting earnings. he also weighed in on the issue of brexit. we do expect the continuation of market volatility, certainly until the referendum. i don't want to speculate about the outcome of the referendum, probably even after the referendum. is it enough to endanger the economic recovery in the euro area?
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the assessment of our staff is that the risk of this happening is limited. that could come in the form of tighter monetary conditions. ift to add, he said that conditions don't tighten enough to alter their outlook, then the ecb is ready to act with all the tools and instruments it has. rishaad: thanks, david. on our website, the first flight for japan's stealth jet. have a look at it. bloomberg.com/asia. china hasd out what to do to get asia included on a local benchmark and how that will affect local investors. that is coming up in about 35 minutes. coming up next, absolute onerns, we find out where person is looking for zero correlation with equity markets. we will be back in just a couple of minutes.
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this is "trending business". ♪
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a stronger yen weighing on japanese shares. it is time to consider the funds with absolute return characteristics. family office research management, joining us from sydney. great to see you. let's start off with what people are asking. you were telling me that we have political risks, but let's start off with china debt. why are people that concern? people in this part of the world are very sensitive about the commodity trade with australia and china, so they're asking about the potential for a hard landing. what we keep coming back to is debt levels have risen
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sharply, weight too high and china, but the only real way to look at it is to dovetail the chinese five-year plan with what they are doing with the debt position. , which areanies allowed to default on bonds overseas, but then we see china railway materials corporation not defaulting, see think to yourself, what is it about china railway that is protected, and obviously it is the fact that it is critical to the chinese plan, and the areas where they are wanting to do fast, they are allowed to default -- wanting to ivest, they are allowed to default. in the next year or two, we will see a lot more defaults on chinese debt, some of them u.s. dollar denominated. rishaad: quite small compared to
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what we have held indigenously, because it is debt where the burden is on the chinese people, and the way the country is set up, sure, there are some systemic risks when it comes to commodities, but overall it is a relatively closed economy, so people should not worry as much as they are. that could be a view. >> yes, and i take that point. we did actually hold some bonds in the major chinese banks for clients, and we sold out of them entirely a few months ago. i prefer to stand back at this point in time. being declared are still low, but the number is rising, and when the bad debt direction of disclosures is upward, that can have a big impact on prices, even if that number is not monumental. is one thing of concern with your clients, high net worth individuals. political to the
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risks, the u.s. election, and a , britain leaving the european union with that referendum on june 23. is this now looming large in people's minds? is very large in people's minds, especially those in the u k and on the continent. they are speaking about it in every meeting, and it looks to me like the lead up to the june 23 vote is going to be the time of volatility, not the postelection outcome. if the election action delivers exit, that will be followed by trade pacts one at a time and a reconstruction of the relationships. lead up to about the that, and then the case of the u.s. political scene, i'm worried about the lead up to the republican convention. the first three weeks of july before we get to that first ballot. transpacificy is
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trade, and if the agreement and various features are in question, then that is a bad outlook for global equity markets. areaad: no doubt you watching japan with some interest as well. bank of japan expected to go further into negative interest rate. ,r. kuroda is doing the work but any further move towards negative rates might show this policy is not working. shinzo abe sitting there. while tokyong burns? >> one of the things we have to watch closely is the degree of japanese investment outside of japan, and to what extent that
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speeds up or diversifies. in australia, we will see a number of acquisitions of austrian assets by japanese companies and greater trade alliances being built. that is positive for japan, because that gold in japan has to be invested someplace else besides bond rates that are negative. japan will have to cut rates. if it happens quickly, we will see a moderation. either way, the direction is slightly or greatly accommodative, one of the other -- or the other. rishaad: thank you there. joining us from sydney. >> the stories making headlines around the world. of personal data of millions voters in the philippines are still available after the hacking of the election commission. personal details have been displayed, allowing identity thieves to access passport information, fingerprints, and more. a person has been arrested, and
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there is a report he has admitted to compromising the attacks. suspended by the world doping watchdog, the suspension takes place immediately and prevents the lab from carrying out activities for four months. the lab has been told to take remedial steps identified by the disciplinary committee. the lab has 21 days to appeal. a mission to fly around the world powered by the sun is under again. solar impulse left hawaii bound for california. it has been stranded since last july with battery problems. the marathon mission began in march of last year and has visited numerous countries. it will cross the atlantic, heading back to abu dhabi. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. signs,: up next, ominous
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chinese stocks missing out on , butecent global uptick investors there have plenty else to worry about. the details are coming up next on "trending business". ♪
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rishaad: where counting down to the open of hong kong and china. 8/10 of 1%, down following on what we have seen in this part of the world. the shanghai composite falling by more than 4% this week. of 93 globalorst benchmarks, the steepest decline in almost two months. it's not just the stock market's down in the dumps, some ominous charts as well to show us. to get theg
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weekend started like a scary chart out of china. the markets extending declines on this last trading day of the week. we had a 4.5% decline on wednesday. when you're talking about asia, that is not such a huge moves. the is more about diversions story, china not partaking in the global risk rally party we have been seeing. had commodities and equities climbed higher, and the chinese market in this slumps. it remains the worst performing market in all the markets this world, down 12% in the first quarter. seeing this diversion given that the data out of china has been fairly good, gdp, investor data, better than expected. markets are questioning the veracity of this data.
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if you do believe the data, at what cost do these growth spurts -- and i want to show you an example. when the chinese economy should be deleveraging, we are seeing record highs when it comes to credit expansion. of new creditlars added in the first quarter. we have also seen the concern over corporate defaults rise as well, seven companies missing payments. that is already the 2015 tally. quickly, the yuan, a lot of people saying it has been stable. it has been stable against the u.s. dollar. against that basket of it is trading at its
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lowest level since november 2014, a 17 month low for the chinese currency. right, looking at the forecast for new energy, next. ♪ you shouldn't have to go far
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i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. rishaad: a look at our top stories, asian equities on the way down. this is after disappointing corporate results, which included microsoft, alphabet, and sony. the yen holding on to recent gains. thursday'se up after 2% drop, a third weekly rise. more than motors lost 40% of its market value and the fallout from its fuel efficiency scandal. government investigators raided
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its offices on thursday. nissan said it made that mitsubishi as a supplier of many cars. hitting central bank back at german critics and frankfurt. he says the more they undermined his stimulus, the more he will have to deliver. the low rate policies have been criticized, and the german finance minister says they are contributing to the rise of anti-euro populism. indeed, a lot to chew on. i look at how investors in this part of the world are currently. a lot ofeen quite selling. >> only two bank stocks higher at the moment as the hang seng is down. that oil price in new york trimmed its gains. the shanghai market lower by a tense of 1%, underperforming the
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region this week. we've also seen the philippines open flat. extending losses as the yen strengthens against the dollar. the kospi has been steady, down a third of 1%. by crude00 being hit prices in new york, down half a percent. down half ofindex a percent, trimming its loss to 1%. there is only one sector higher on that index, and that is financials. i want to show you some stocks we are watching in hong kong. isa's third-largest insurer up 3%, but had jumped 4% on the open, its biggest since december. its new business value jump 36% in the first quarter, beating analysts estimates.
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china eastern airlines also a solid performer. and atlas iron in australia has ended its share holder meeting to discuss restructuring. it is up 9%. those solid gainers, a downbeat day in the region. lossesseeing those continue on the open in hong kong and in china, similar to what we saw on global equities on thursday. rishaad: mitsubishi motors plunging again, 12% this time, having lost a third of its value. a 40% fall back so far. fallout from this few efficiency scandal is now enormous. there are signs it will get bigger. onlytsubishi is not the one. we have been talking about volkswagen for a while. the regulators are clamping down , rightfully so, because the
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emission standards are becoming more stringent. rishaad: they did not even ,onform to current standards but they conform to 2000 three standards. -- 2003 standards. already many cars are fuel-efficient compared to the rest of the fleet, so they are back to 2003 standards, but at the end of the day, they are still fuel-efficient and him it less pollutants. rishaad: what sort of penalties could they suffer. we have been discussing this. areother side, if they doing this too many cars, what about other models? >> the investigation is still ongoing, ok? we do have some preliminary estimates we came up with. i-vehicles were
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given a tax break of two percentage points. basically, mitsubishi could be on the hook to repay those tax credits of around $200 million. again, those are early figures. there may be other penalties involved, other vehicles involved. we will have to see as it plays out. rishaad: thank you very much indeed. right, softbank investors are calling for an investigation, questioning the track record for their number two. what are they looking for here? >> hi. the investor group has called for the board of softbank to set up an independent investigation into the number two at the company over what they say are potential conflicts
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of interest, and some business decisions that may reflect poor judgment. they sent this letter to the board in january of this year, and they asked for some kind of response. they say they have not received any kind of response at this point, so they are weighing what kind of further action they may take. rishaad: ok, well, what do we know about the investment group and what is softbank's response? >> we know little about the investment group. the letter came from a new york law form, a high-profile law firm, but does not name any of the investors involved in this. the attorney is name, but they don't identify the investors. there is one swiss investor we , who holds a small number of shares, about $100,000 worth of shares in the softbank and sprint. clear what kind of
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standing that will give him with the board or would softbank if the investor group is broader, they say it is broader, they say there are more investors involved, but they have not said who those other investors are, how much stock they own, so it is hard to determine how much weight they will get as they make this presentation to the board. softbank's response has been a of the founderg of the company, and the ceo says 1000% and is confident he will go on to do good things for the company. they went through point by point the issues raised in the letter and gave a defense of them. for example, the letter asks about conflicts of interest at his role with silver lake, saying there may be conflict of interests between that role and softbank.
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softbank says there are some benefits to him being involved with silver lake. and as he more deals, tries to pick investments with startups, he's able to get a broader perspective of what is going on. in addition, there is a vetting process, so they are very confident that he has done nothing wrong and confident that he will be able to contribute to the company going forward. rishaad: thank you. joining us from tokyo. getting you up to speed with some other stories. bonuses on wall street making headlines. they could be restricted soon. the dodd frank act makes investors wait for years to collect extra compensation, and may force them to return money if their companies lose heavily. the national credit union administration is seeking public comments. the fed and the sec are expected to follow.
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costs ofays the hacking a terrorist iphone was worth it. the director admits it wasn't cheap, with the bill totaling more than seven years of his salary. was $183,000.ear breaking into the phone cost more than $1.3 million. singapore managing authority confirming that it is investigating possible breaches of regulations, seizing documents from brokerages. of brokerages were rated by authorities on monday, and several people were taken in for questioning. the brokerages named have declined to comment. , new energy rivals distancing themselves from the collapse of sun edison, saying the largest bankruptcy in the u.s. this year will not harm the industry. producer largest seeking protection after racking
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up liabilities. it is a crowded list of bankruptcies here, isn't it? >> certainly. you have a company that had $11.7 billion in debt, up from $29 million in debt in 2009, in a field, as with many other assets that we deal with, able to borrow money, now coming back to raised. $11 billion from peabody energy, a pure cold player, so you are starting to see compression. rishaad: why? >> if you borrow a lot of money beyond what you can pay, you will run into a lot of trouble. , it had to sell projects onto subsidiaries -- a separate publicly listed company
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to warehouse assets. in the case of peabody, you're selling a commodity. if you are selling it for less do, thenare able to you are in a tight spot. rishaad: and away, it leaves these companies with more and more spend on new energy? >> it is a good question. the biggest question we have is does it matter what the companies do for the industry. the answer in both cases is no. you have a large pool of assets in the case of sun edison. people will buy them. there is ample supply to meet any demand in the market. you could say in the coal market , it does not fundamentally change the supply or demand equation, though in the long run , with the paris agreement being signed, we do hope to see more demand on the cleaner side of things. rishaad: thank you very much
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indeed. we will be talking to the head of ftse russell, coming up. ♪
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>> welcome back. it is 943 a.m. in hong kong. these other stories making headlines from around the world. haslegation from taipei visited individuals held in china. they were taken to china after they were deported from kenya. says it has jurisdiction over them because the citizens were the main target. say its firstapan elf fighter has made its first test flight. the jet will now be handed over
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to the self defense force for further testing. the plane strengthens the government's hand. it could further antagonize china and korea, who oppose japan's aggressive outlook. embattled indian company has prove his pay to intent to settle with creditors. he made the offer, saying the founder is not a willful the defaulter. he left earlier on a diplomatic passport. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. i am haidi lun. china,: our attention to the ftse russell has launched its index their last month. what is it mean for those shares
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of joining the global index? to ourut that question guest. tell us what you are doing, first of all. with this index, we are responding to the enormous interest in china. we all know there is often a discount between the shares the trade in hong kong and the shares that trade in shanghai. an index where you benefit from investing in the line of stock which is at a discount. ,t might be one or the other and we switch into the discounted lane. it is active in that way, but in a controlled way. you do get an outperformance from this. hares typically trade at a premium. there's only been a few times when they have traded at a discount. rishaad: we saw recently a premium of 47% of a shares over
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h-shares. shares discount on the h- is about 15%. we were able to use a stock connect that enables us to trade. there will be etf's on this index. they start trading in london and frankfurt first, then comes hong kong. they will be available to investors in the next month. rishaad: what about the shenzhen stock in a there as well? >> once it is up and running, we will use the connect. the stock connect will be available before the in the the year. rishaad: what does china need to do it effectively to gain broad acceptance by these index
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providers, such as yourself? >> i think the authorities in china have been edging towards improving capital mobility, but the mobility has to be both investing in and also being able to take money out. at the moment, foreign investors in china -- it only represents 2% of the market -- and in most emerging markets, it should be around 30%. 30% is $2 from 2% to trillion. left forwhat steps are the chinese government to convince people? >> on the capital mobility, they have to align the different programs. they've announced that that is their intention. we would like to see that happen. we would like to see and's in stock connect in place, and also stock connectn
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in place. rishaad: we have the trading ban at the start of the year, which got rescinded. how much damage for the recent on reputation? >> certainly we can see the flows of investments into and out of china. during when we had that volatility and so many companies who were self suspending, that was a poor time for the china market, but it has bounced back quickly. sentiment has moved very quickly to be very positive about china. people now think china is fairly valued. rishaad: again, is it fairly regulated? -- we reported that they are considering one big super regulator, if you like. >> what we are seeing is that
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the regulation is getting better and better, but this is a market driven by retail trade, and that means it is driven by momentum trading. up andmarket opens international institutional investors come into the market, they will add stability, put pressure on companies to improve governance, and i think that will improve the market in a very big way. rishaad: how much interest is there in china now? have you seen it develop exponentially in the last few years? >> there is enormous interest in china. it is the second biggest market in the world. therefore, ever global investor has to be interested in china. i think the china market is getting to a stage where we will be included in global benchmarks , but it would take a number of
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years for us to include it to its full weight. this is a market that is bigger than the u.k., bigger than japan, and it will be huge as a transition to bring that into global portfolios. rishaad: great talking to you. thank you very much indeed. a quick look at some of the stories making headlines. companye online travel is buying into chinese eastern, spending foreign and $60 million for 3.5% in the airline. $2 billion spent by china eastern, mainly to be used on new aircraft. it may choose to increase its stake to 10% in the future. paying off debt will not your the real estate company was thought to be runnable after its debt doubled last year, 15 times earnings. grande says it's debt
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can be rolled over. one person will guarantee a as his group is looking for investors to buy a percentage of the property unit. he will buy back the shares at a 12% annual return. singer, songwriter, musical superstar, prince has died at the age of 57. i look at the enormous sponsor -- response on social media. this is "trending business". ♪
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rishaad: the music world is mourning the loss of another superstar, singer, songwriter,
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prince has died at the age of 57. he was found unconscious in an elevator at his studio. he was forced to cancel a concert due to ill health. theecame a global star in 1980's. he was fiercely protective of his work and fought warner bros. for control of his music. surprisingly, an a norma's response to this on social media. david is having a look. david: we woke up to the news. rishaad: i was actually shocked. it was incredible. david: that is the sense you get from all the messages on social media. musicians --cers, prince cross genres, 40 years in the business am a so let's have a look at some of these messages
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now. we have one from usher posting on his twitter, just came back from cuba and received horrible news. i will forever cherish you and what you gave this earth. can we run through some of these other messages as well? we had one from oprah winfrey, alluding to -- there we go, the doves really crying now. listening to your music, remembering you. this one from sir paul mccartney. he had two tweets. this is the shorter one. the other tweets basically said that they saw each other new year's. this one is from the grammys, the awards body themselves. his legacy will live on forever. an americaning from
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rock star. suffice to say he was very much in shock. we just lost a true artistic pioneer. lionel richie also posting this on twitter as well. i still can't believe. rishaad: this year, it has been a difficult year. since you brought it up, there is one message here. , so many thisaid year. i can't wait to hear what you and david bowie are cooking up in heaven. so we will be back little bit later on. rishaad: david, thank you. right, ok, mariota rug he getting caught up in the german
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political game. mario draghi getting caught up in the german political game. -- former first minute or minister of scotland joining us as well. this is "trending business". ♪
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♪ >> from our studios in new york city, this is "charlie rose." >> good evening, i am al hunt, filling in for charlie rose, who was on assignment. we will take a look at last night's primaries. donald trump got control, beating out john kasich and ted cruz. trump won nearly 65% of the vote, capturing around 90 of the 95 delegates. hillary clinton one over 63% of the vote. the margin of victory letter to declare that the nomination is now in sight.

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